bioAffinity Technologies, Inc. (BIAF) is a biotechnology company at the forefront of developing innovative diagnostic solutions to address the critical need for noninvasive, accurate tests to detect early-stage lung cancer and other respiratory diseases. Founded in 2014 and headquartered in San Antonio, Texas, the company has made significant strides in advancing its proprietary diagnostic platform and expanding its patent portfolio.
Company History and Business Overview
bioAffinity Technologies was established on March 26, 2014, as a Delaware corporation with its corporate offices located in San Antonio, Texas. The company was founded to address the need for noninvasive diagnosis of early-stage cancer and diseases of the lung. In June 2016, bioAffinity formed a wholly owned subsidiary, OncoSelect Therapeutics, LLC, as a Delaware limited liability company.
A significant development occurred on August 14, 2023, when the company formed another wholly owned subsidiary, Precision Pathology Laboratory Services, LLC (PPLS), as a Texas limited liability company. This strategic move was made to acquire the assets of Village Oaks Pathology Services, P.A., a Texas professional association doing business as Precision Pathology Services Village Oaks, including the clinical pathology laboratory it owned.
Prior to the acquisition of the laboratory by PPLS, Village Oaks had licensed and developed bioAffinity's CyPath Lung as a laboratory developed test (LDT) for sale to physicians. The license agreement provided that revenues from the sale would be split evenly between bioAffinity and Village Oaks. In the second quarter of 2022, prior to the acquisition, bioAffinity started to recognize revenue as part of a limited beta market testing program of the CyPath Lung test.
It's worth noting that before the acquisition of the clinical pathology laboratory, bioAffinity's revenue was generated through multiple sources: royalties from CyPath Lung, clinical flow cytometry services provided to Village Oaks related to CyPath Lung, and CyPath Lung tests purchased by the U.S. Department of Defense for an observational study.
bioAffinity Technologies operates in two main business segments:
1. Diagnostic Research and Development (R&D) Segment: This segment includes the research and development and clinical development activities related to bioAffinity's diagnostic tests, primarily focusing on the development of CyPath Lung. Revenues assigned to this segment are primarily from proceeds received from observational studies.
2. Laboratory Services Segment: This segment includes all operations from PPLS, which bioAffinity acquired in September 2023. It encompasses the sales and marketing costs of the CyPath Lung diagnostic test, as well as the overall laboratory services provided by PPLS. PPLS generates three main sources of revenue - patient service fees, histology service fees, and medical director fees.
The company is also conducting early-stage research on therapeutic discoveries that could result in broad-spectrum cancer treatments. However, these therapeutic programs are in the preliminary stages and have not generated any revenue to date.
Financial Performance and Liquidity
Financial Performance
As a clinical-stage biotechnology company, bioAffinity has yet to achieve profitability, recording net losses for the past several years. In the fiscal year ended December 31, 2023, the company reported total revenue of $2.53 million, with a net loss of $7.94 million. The operating cash flow (OCF) for 2023 was -$6.04 million, and the free cash flow (FCF) was -$6.06 million. As of that date, the company had an accumulated deficit of $44.60 million.
For the third quarter of 2024, ending September 30, bioAffinity reported significant growth in revenue, reaching $2,350,386, which represents an increase of over 700% year-over-year. This substantial growth was primarily attributed to the acquisition of PPLS in September 2023. However, the company still recorded a net loss of $2,000,840 for the quarter. The operating cash flow (OCF) for Q3 2024 was -$1,709,234, and the free cash flow (FCF) was -$1,718,644.
For the first nine months of 2024, the company's total net revenue increased dramatically to $7.15 million, compared to $319,140 in the same period of 2023. This significant increase was primarily driven by the acquisition of PPLS and the resulting laboratory services revenue. Despite this revenue growth, the company's net loss for the first nine months of 2024 was $6.07 million, compared to a net loss of $5.56 million in the same period of 2023.
Liquidity
As of September 30, 2024, bioAffinity had cash and cash equivalents of $756,580, which, according to management, is not sufficient to support operations beyond March 2025. This represents a significant decrease from the $2.82 million in cash and cash equivalents at the end of 2023. To address this liquidity concern, bioAffinity completed a $2.66 million registered direct offering and concurrent private placement in October 2024, which the company expects will provide additional runway to fund its ongoing operations and research and development activities.
The company's debt-to-equity ratio stands at 0.55, indicating a moderate level of leverage. The current ratio is 1.02, and the quick ratio is 1.01, suggesting that the company has just enough liquid assets to cover its short-term liabilities.
Management has concluded that there is substantial doubt about the company's ability to continue as a going concern for at least the next 12 months without raising additional capital. The company has not disclosed details on any available credit lines or facilities.
Key Milestones and Regulatory Approvals
bioAffinity's primary focus has been on the development and commercialization of its CyPath® Lung diagnostic test. In September 2023, the company announced the publication of an economic study in a peer-reviewed journal, which concluded that adding CyPath® Lung to the standard of care for Medicare and private-payer patients could result in significant healthcare cost savings.
On the regulatory front, CyPath® Lung is currently marketed as a laboratory-developed test (LDT) under the Clinical Laboratory Improvement Amendments (CLIA) guidelines and regulations administered by the Centers for Medicare and Medicaid Services (CMS) and the College of American Pathologists (CAP). The company is also pursuing de novo classification from the U.S. Food and Drug Administration (FDA) for CyPath® Lung as a Class II in vitro diagnostic, which would further strengthen the test's commercial potential.
In a significant milestone, bioAffinity announced in October 2024 that the Japan Patent Office had issued a Certificate of Grant of Patent to the company for the method of predicting the likelihood of lung cancer used by the CyPath® Lung diagnostic test. This Japanese patent, titled "System and Method for Determining the State of Health of the Lungs," is an important addition to bioAffinity's expanding intellectual property portfolio, which now includes 17 awarded U.S. and foreign patents and 30 pending patent applications.
Competitive Landscape and Growth Opportunities
The early detection of lung cancer is a critical unmet need, and bioAffinity faces competition from other diagnostic companies developing solutions in this space. However, the company's CyPath® Lung test has several unique features that differentiate it from existing options, including its noninvasive approach, high accuracy, and the potential to reduce unnecessary medical procedures and associated costs.
Looking ahead, bioAffinity is well-positioned to capitalize on several growth opportunities. The company's recent addition of the clinical pathology laboratory through the acquisition of Village Oaks Pathology Services, P.A. is expected to enhance its operational efficiency and control over the testing process, ultimately improving the commercial viability of CyPath® Lung. This acquisition is anticipated to increase revenue, although the company has not provided specific details on the expected financial contribution.
Furthermore, bioAffinity announced in October 2024 that CyPath® Lung will be added to the U.S. Federal Supply Schedule, providing the Veterans Health Administration (VHA) and the Military Health System streamlined access to the test. This represents a significant opportunity for the company to expand its customer base and potentially generate a new revenue stream from the diagnosis and treatment of lung cancer in the veteran population.
While the company has not provided detailed geographic performance data, as a small cap company, it is likely that the majority of its revenue comes from the U.S. market.
Risks and Challenges
As with any clinical-stage biotechnology company, bioAffinity faces a range of risks and challenges that could impact its long-term success. These include the inherent uncertainties associated with the development and regulatory approval of diagnostic tests, the ability to secure adequate funding to support ongoing operations and research and development, and the potential for increased competition in the early lung cancer detection market.
Additionally, the company's reliance on the successful commercialization of its CyPath® Lung test as its primary revenue driver presents a significant risk. Any delays or setbacks in the test's adoption by physicians or reimbursement coverage by payers could have a material adverse effect on the company's financial performance and growth prospects.
The company's financial situation, particularly its limited cash reserves and ongoing losses, poses a significant challenge. The substantial doubt about bioAffinity's ability to continue as a going concern without raising additional capital underscores the financial risks facing the company.
Conclusion
bioAffinity Technologies is a promising biotechnology company that is positioned to make a significant impact in the early detection of lung cancer. With its proprietary CyPath® Lung diagnostic test, the company is addressing a critical unmet need and working to improve patient outcomes through noninvasive and accurate testing solutions. Despite the financial and operational challenges typical of a clinical-stage organization, bioAffinity has demonstrated its ability to navigate these obstacles, secure funding, and make strategic acquisitions to strengthen its market positioning.
The company's recent revenue growth, driven by the acquisition of PPLS, is encouraging, although it continues to operate at a net loss. The addition of CyPath® Lung to the U.S. Federal Supply Schedule and the expansion of its intellectual property portfolio with the Japanese patent grant are positive developments that could contribute to future growth.
As bioAffinity continues to execute on its growth strategy, expand its intellectual property portfolio, and explore new avenues for commercial success, it remains an intriguing investment opportunity for investors interested in the rapidly evolving field of early cancer detection and diagnostics. However, potential investors should carefully consider the company's ongoing financial challenges and the risks associated with its ability to secure additional funding and achieve profitability in the future.